Does Entry Remedy Collusion? Evidence from the Generic Prescription Drug Cartel

• 成果类型: Article
• 署名作者: Starc, Amanda; Wollmann, Thomas g.
• 署名单位: Northwestern University; National Bureau of Economic Research; University of Chicago
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20220276
• 发表日期: 2025
• 页码: 1400-1438
• 关键词: moment inequalities; UNITED-STATES; market power; predation; ORGANIZATION; COMPETITION; STABILITY; oligopoly; models; CHOICE

摘要

Entry represents a fundamental threat to cartels. We study the extent and effect of this behavior in the largest price-fixing case in US history, which involves generic drug manufacturing. We link information on the cartel's internal operations to regulatory filings and market data. There is a substantial increase in entry after cartel formation, but regulatory approvals delay most entrants by two to four years. We estimate a structural model and simulate counterfactual equilibria. Absent entry, cartel profits would be dramatically higher. Correspondingly, reducing regulatory delays by just 1-2 years equates to consumer compensating variation of $612 million-$1.5 billion.